Farah, LLC v. Architura Corp.

952 N.E.2d 328, 2011 Ind. App. LEXIS 1498, 2011 WL 3556924
CourtIndiana Court of Appeals
DecidedAugust 12, 2011
DocketNo. 49A05-1012-PL-793
StatusPublished
Cited by15 cases

This text of 952 N.E.2d 328 (Farah, LLC v. Architura Corp.) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farah, LLC v. Architura Corp., 952 N.E.2d 328, 2011 Ind. App. LEXIS 1498, 2011 WL 3556924 (Ind. Ct. App. 2011).

Opinion

OPINION

BARNES, Judge.

Case Summary

Farah, LLC, and Barrington Jewels, Inc., (collectively “Farah”) appeal the trial court’s judgment in its breach of contract action against Architura Corporation (“Ar-chitura”) and Architura’s counterclaim on a mechanic’s lien. We affirm in part, reverse in part, and remand.

Issues

The restated issues before us are:

I. whether the trial court awarded excessive damages to Architura on its mechanic’s lien claim against Farah;
II. whether the trial court properly awarded no damages to Farah on its claim that Architura had failed to inspect a building renovation project that Farah had hired Ar-chitura to oversee; and
III. whether the trial court awarded inadequate damages to Farah on its remaining breach of contract claims against Architura.

[331]*331Facts

Farah, under the Barrington Jewels name, operates a high-end jewelry store business. Farah is owned by Mitra and Goel Ahdoot. In 2003, Farah purchased a former O’Charley’s restaurant in Indianapolis with the intent of renovating it into a Barrington Jewels location. Farah entered into a contract with Architura, an architectural firm, to prepare designs for the renovation, as well as to secure bids for the project and oversee construction. The contract, signed by Goel at the end of February 2003, stated that Architura would be paid $40,000 for those services, and that it could collect an additional $1500 in reimbursable expenses. The contract also provided:

Work Not Included in scope and fee
1. Planning work to move large entry sign
2. Interior furniture design of loose furniture items
3. Security system design
4. Contractor’s permits
5. Major changes to building design after approval of schematic documents. (Major means moving exterior walls or substantial structural change.)
We can provide these services, but added fee would be required.

Ex. A.

There were some issues early in the design and bidding process with respect to keeping the cost of the renovation within Farah’s bank-established budget. Mike Conly of Architura submitted a renovation plan to the Ahdoots in early April 2003, but they requested a number of changes to those plans for budgetary reasons. Conly revised the plans, per the Ahdoots’ comments, and sent the plans out for bid. Still, the bids came in well over Farah’s budget.

Further negotiations ensued with one of the bidders, Capitol Construction (“Capitol”), to bring the cost within Farah’s budget. Eventually, Conly reported to the Ahdoots that Capitol would be able to complete the project for an acceptable amount of $747,000. To reach this amount, however, Conly evidently agreed to the removal of several design elements that later had to be added back into the renovation. Some of the items included granite coun-tertops, the moving of an HVAC unit, extra concrete and outlets, and steps at the front of the building. The steps cost an additional $8000, of which Architura paid $5000. Although the total cost of all these items was approximately $55,000, based on change orders that were later executed for them, there is no evidence, aside from the steps, that this cost exceeded what it would have cost for the items if they had been included in the original construction contract.

During the course of construction, disputes arose between Farah and Architura with respect to payment. On August 11, 2003, Architura filed a mechanic’s lien against the property. This lien was released after Farah paid a total of $34,000 to Architura. On December 9, 2003, Ar-chitura filed a second mechanic’s lien, claiming that it had provided services to Farah well in excess of those contemplated by the parties’ original contract. To obtain release of this lien against the property, Farah paid $50,300 to the trial court clerk in September 2004.

Various problems with respect to construction also arose. Among other things, the interior lighting design became inadequate when pillars inside the store had to be moved, interfering with the lighting. The roof did not drain properly, resulting in multiple water leaks into the building. The bottom of the exterior walls were not properly insulated, resulting in heat escap[332]*332ing and potential insect infiltration. As mentioned, steps had to be added to the front of the building that were not originally accounted for. Access to both the roof of the building and outdoor signage was lacking or inadequate.

Architura prepared a “certificate of substantial completion” for the renovated building in November 2003. Such a certificate means that a building is ready for occupancy, but that further matters, detailed in a “punch list,” must still be addressed by the contractor. Architura first prepared a letter certifying that Capitol had completed the items on the punch list on April 7, 2004. This letter would have authorized the bank financing the renovation to release the remaining funds it was holding in escrow — $38,000—to Capitol as final payment for the project. However, a banker learned that no one from Architura had actually inspected the building before issuing the certificate of completion. Subsequently, Conly did inspect the premises. On April 21, 2004, Conly issued a second letter indicating that, subject to some exceptions, the items on the punch list had been completed. Additionally, the bank hired someone to conduct an independent inspection of the premises, and after that had occurred it released the final funds to Capitol.

On November 9, 2007, Farah filed suit against Architura, alleging that it was ha-ble for numerous alleged deficiencies in the renovation project. Architura filed a counterclaim against Farah related to the December 2003 mechanic’s hen, seeking to recover the $35,300 in additional professional fees, plus prejudgment interest and attorney fees.

Capitol also was a party to the lawsuit below. However, the parties have not explained, nor does the CCS indicate, precisely what is the status of any action between Capitol and Farah and/or Capitol and Architura. The last mention of Capitol in the CCS appears to be that it filed a motion to dismiss and demand for arbitration, which the trial court denied on May 19, 2010. Architura subsequently filed a motion to consolidate cases for trial or, in the alternative, for leave to amend then-answer to assert a non-party defense as to Capitol. The trial court granted the motion for leave to amend at the beginning of the Farah-Architura bench trial, which commenced on June 7, 2010.

The trial court entered judgment, accompanied by some sua sponte findings, on September 29, 2010. The trial court specifically found that Architura had breached its contract with Farah with respect to failure to design adequate access to outdoor signage and the roof, the interior lighting design, and exterior wall insulation design. With respect to the roof leakage, the trial court found that that problem was the result of both construction deficiencies by Capitol and design deficiencies by Architura. The trial court found Farah was entitled to compensation from Architura for these breaches in the amount of $64,310, plus $35,147 in prejudgment interest, for a total of $99,457.

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Cite This Page — Counsel Stack

Bluebook (online)
952 N.E.2d 328, 2011 Ind. App. LEXIS 1498, 2011 WL 3556924, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farah-llc-v-architura-corp-indctapp-2011.